What is a commercial bridging loan?

A commercial or business bridging loan is a short-term solution to cover funding gaps while waiting for longer-term finance or a future income source. It’s often used to ‘bridge the gap’ between two transactions — for example, buying a new property before selling an existing one — and can provide fast access to capital, sometimes within just a few days.

Bridging loans are typically secured against an asset, such as commercial property, which helps lenders offer higher borrowing limits and faster decisions. Businesses might use them for time-sensitive opportunities, property purchases, refurbishments, or to cover urgent expenses while waiting for revenue or refinancing to come through.

Bridging loan terms typically range from 1 to 12 months, and interest can be paid monthly or rolled up to be repaid at the end of the term. As with any secured finance, it’s essential to have a clear repayment strategy, as your asset is at risk if you can’t repay on time.

Are you eligible for a commercial bridging loan?

Commercial bridging loans are designed to provide short-term financing solutions for business owners. Specific criteria can vary between lenders, but there are some common factors they’ll typically consider:

  • Loan-to-value (LTV) ratio: The more equity you have, the better the deal you might get.

  • Credit history: A strong score helps, but some lenders are more flexible than others.

  • Security: You'll need to provide an asset as security, typically commercial property. The value and type of this asset can influence the loan amount and terms.

  • Property condition and plans: If you’re planning to renovate a commercial property, lenders will look at what state it’s in and what you intend to do.

  • Exit plan: Lenders will want to see a clear plan for how you intend to repay the loan, such as through the sale of a property or securing long-term financing.

As with any mortgage or secured loan, your home or other property may be repossessed if you do not keep up with repayments.

How do commercial bridging loans work?

When it comes to bridging loans for business, there are two main types to choose from, depending on your needs and flexibility:

Open bridging loans

These are flexible loans with no fixed repayment date, so you can pay them off whenever you have the funds available. Lenders generally expect you to clear the debt within a year, though some may offer longer repayment terms. It can be a great option if you need more breathing room, but just be mindful of the clock ticking!

Closed bridging loans

With closed loans, you’ve got a set repayment date. This is usually linked to when you expect your funds to come through, like when your property sale completes. These loans tend to be cheaper than open ones, but since there's less wiggle room on repayment, they might not be as flexible.

Whichever option you go for, lenders will ask you for a solid ‘exit plan’ — basically, how you plan to pay it back (like from a property sale or other funds). So, be ready to outline your plan before you borrow!

How much can I borrow with a commercial bridging loan?

Business bridging loans are designed to be flexible, and the amount you can borrow largely depends on the value of the property you're using as security. As a general guide, bridging loan lenders tend to offer up to 75% loan-to-value (LTV). So, if you have a commercial property valued at £600,000, you could potentially borrow up to £450,000. In terms of minimum and maximum loan amounts, lenders can offer bridging loans from anywhere from around £5,000 to several million.

Additionally, the type of charge on your loan affects how much you can borrow:

First charge bridging loan

With a first charge bridging loan, the lender has first dibs on your property if things go wrong, so they may be happy to lend more, and potentially at lower interest rates.

Second charge loan

A second charge loan sits behind an existing mortgage, so you might not be able to borrow as much, and you’ll usually need permission from your main mortgage lender first.

As bridging loans are short-term, the interest rates can be higher than what you'd get with a typical mortgage. However, you’ll typically only pay that higher rate for a much shorter time – often just a few months.

What are the pros and cons of a bridging loan for business?

Bridging loans can be a handy short-term option when you need access to funds for your business quickly. But like any type of finance, they come with their own set of pros and cons.

Here's what to weigh up before you decide if a bridging loan is right for you.

Pros of bridging loans

  • Quick access to funds: Bridging loans can be arranged swiftly, often within a few days. This can make them ideal for time-sensitive situations like property auctions or meeting short-term cash flow needs or unexpected business expenses.

  • Flexible repayment options: Borrowers can choose from various repayment methods, such as monthly interest payments, or rolled-up interest where the interest is paid at the end of the loan term.

  • Can help with unmortgageable properties: If a property has issues like structural defects or a short lease, a bridging loan can give you the funds to fix the problem before switching to a standard or commercial mortgage.

  • Can borrow large sums: Bridging loans are often available in high amounts, especially when backed by valuable property, giving you more financial firepower for big purchases.

Cons of bridging loans

  • Higher interest rates and fees: Bridging loans can be expensive in comparison to other types of mortgages and loans as interest is applied daily rather than annually. Also, there may be additional fees such as valuation, arrangement, exit and legal fees that can make them more expensive than traditional loans.

  • Risk of repossession: As these loans are secured against property, failure to repay can lead to the lender repossessing the asset to recover the debt.

  • Requirement for a clear exit strategy: Lenders typically require a well-defined plan for repaying the loan, such as the sale of a property or securing long-term financing. Without a solid exit strategy, obtaining a bridging loan can be challenging.

Loan guides

Answering your questions about commercial bridging loans

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Page updated on 11th September 2025, Reviewed by Richard Groom